International trade and polarization in the labor market
AbstractThe paper builds an argument that international trade can be one explanation behind polarization of employment in the labor market observed in developed countries such as U.K. and U.S. It considers a small open economy, having production sectors which use three types of labor: high-skill, middle-skill and low-skill. The economy faces an increase in the relative price of the high-skill intensive sector. Using decision rules for choosing middle-skill and low-skill education, it is shown that such a terms of trade shock can lead to higher shares of high-skill as well as low-skill workers in the total workforce. The effects off-shoring on wages and job composition are also studied. That of low-skill and high-skill tasks, not middle-skill tasks, is shown to contribute towards polarization in job composition. --
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2011-48.
Date of creation: 2011
Date of revision:
polarization in labor markets; hollowing out; skill biased technical change; terms of trade; off-shoring;
Other versions of this item:
- Das, Satya P., 2012. "International trade and polarization in the labor market," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(6), pages 1-44.
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-13 (All new papers)
- NEP-INT-2011-12-13 (International Trade)
- NEP-LAB-2011-12-13 (Labour Economics)
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